Statutory Misleading and Deceptive Conduct
S 18 – A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
Test:
1. Person
• Natural or legal person, not an unincorporated entity e.g a church.
2. Trade or commerce
• Requires a sufficient nexus to actions of trade or commerce – Concrete Constructions v Nelson
• Gratuitous acts are not in trade or commerce – E v Australian Red Cross 3. Engage in conduct
• S 2(a)(i) – Making of, or giving effect to a provision of a contract.
• S 2(c)(i) – Refraining from doing that act.
• Warranties within a contract can be misleading and deceptive conduct – AS2000 v CCH 4. “Misleading” and “Likely”
• The conduct had the capacity to lead a person into error
• Does not require that the person was actually misled, only that the act had the capacity to mislead.
• Analysis can be in a general context with a class of person à Reasonable consumer in Parkdale v Puxu, Nike v Campomar
o Only remedy is injunction under s 232 as no loss was proven.
• Analysis can be done on an individual level with a higher level of scrutiny – Butcher v Lachlan Realty
o Taking into consideration circumstantial factors of whether the conduct in the context was misleading.
o Required for damages under s 236
• Silence can be actionable if there is a “reasonable expectation of disclosure” – Henjo Investments v Collins, Demagogue v Ramensky
o Duty for reasonable expectation of disclosure will arise from circumstances, e.g choosing to remain silent.
o Difference between duty to disclose title defects and disclosure of quality.
o Without misrepresentation or fraud, no need to disclose quality.
• Predictions are not actionable unless the person has no reasonable grounds for representation – s 4(1)
o Fact that prediction doesn’t come true does not make it misleading, needs for the person to not believe in the statement or never intend to perform the future promise.
• Opinions are not actionable unless the representor did not genuinely hold those opinions. – Global Sportsman v Mirror
• Promises are actionable if the representor had no basis for believing they could fulfil the promise. – Holt v Biroka
Negligent Misstatement causing PEL
• Hedley Byrne v Heller test:
1. Reasonable foreseeability of loss 2. False representation is made by D
3. Voluntary undertaking of responsibility by D 4. Reasonable reliance of P on the statement 5. D knew P would rely on the statement
• L Shaddock v Parramatta Council o Public authorities can owe a DoC
o Not limited to statements of facts, can be advice on a serious topic given in a serious manner.
o More likely to owe a DoC if the person is the sole repository of information.
• San Sebastian v The Minister
o Possible to find a DoC if the information was volunteered if:
§ Person is of special skill
§ Person warrants the truth of the statement
§ Person invites plaintiff to act on the statement
§ Person has an interest in P acting on statement
• Caparo v Dickman
o Limited DoC to shareholder in relation to voting rights, no DoC owed to shareholders in capacity as investors.
o D needs to know of the specific plaintiff or that the plaintiff would be a member of a specific identifiable class.
• Esanada v PMH
o Rejection of notion that auditors owed DoC to people who rely on report.
o Critical to demonstrate that D either induced P or knew that D would rely on the statement.
• BT Australia v Raine Horne
o Unit holders in a trust are owed a DoC by D even though the technical DoC is owed to the trustee.
Topic 3
Common Mistake
Case • McRae v Commonwealth Disposals Commission
Facts • D made a tender offer for a wrecked ship lying 100 miles off coast.
• P won tender for ship and contents, hired crew and fitted out ship for salvage work.
• No ship wreck existed at the point described by D Key
points
• Fundamental question: “What did the promisor really promise? Did they promise to perform his part at all events, or only subject to the mutually contemplated original existence of a particular subject matter?”
• “It must be true to say that a party cannot rely on mutual mistake where the mistake consists of a belief which is, on the one hand, entertained by them without any reasonable ground, and on the other hand, deliberately induced by them in the mind of the other party.”
• D could not rely on mistake to avoid contract as the mistake was induced by serious fault of themselves by asserting the existence of a tanker, recklessly and without any reasonable ground.
• The one party is unable to supply the very thing that the other party contracted to take and therefore the contract is unenforceable by the one if executor, while if executed the other can recover back money paid on the ground of total failure of consideration.
• Key difference from SoGA s 11 as D should have known the goods never existed, D warranted the existence of the goods, thus cannot argue mistake.
Case • Solle v Butcher
Facts • D leased P a flat under the understanding that rent control did not apply, thus rented the flat at a higher rate than allowed.
• P later brought proceedings to recover the amount of overpaid rent.
• D claimed the lease was entered under a common mistake and sought either to nullify contract at common law for mistake or rescind the contract for mistake in equity.
Key points
• Two forms of mistake
• Common law – Renders contract void from the beginning
• No party can rely on their own mistake, regardless of whether it was fundamental or if the other party knew of the mistake
• Requires fraud or misrepresentation.
• Equity – Contract is voidable, can be set aside if court thinks fit
• Set aside when the court thinks it unconscientious for a party to avail themself of a legal advantage gained.
• Can be set aside if one party is induced by a
misrepresentation, does not have to be fraudulent or
fundamental. Alternatively can be voidable if the other party is aware of the mistake and lets the delusion continue.
• No real distinction between rescission for innocent misrepresentation or common misapprehension.
• Relief can be sought after the contract has been executed.
• Rescission is only granted when the parties can be restored to substantially the same position as that in which they were taken before the contract was made.
• In cases involving perished goods, the contract is not void for mistake, but is void for an implied condition precedent, because the contract proceeded on the basic assumption that it was possible to perform.
• Difference between mistake and frustration in terms of perished goods is that mistake is that goods perished before contract was formed, frustration for events after contract formation. (Carter pg.
473)
Case • Svanosio v McNamara
Facts • Contract for the sale of hotel, after title is conveyed it was discovered that the hotel stood partly on Crown land.
• P sought to have the contract declared void for mistake Key
points
• Contract cannot be void for mistake when the contract contemplates and provides for the mistake.
• Mistake either needs to be completely fundamental or possess elements of fraud to void contract. (Note: fraud can be interpreted to include unconscionable dealings. Taylor v Johnson (1983) HCA [Would it be unconscionable to enforce the contract?])
• “The contract between the parties was never void. It was at most liable to be set aside in equity not on the ground of mistake but for failure by the vendors to show good title. A vendor need not have a good title at the date of the contract, it is sufficient if he can show that he can make title at the proper time for completion.” Under this principle, the contract cannot be void merely because the vendor does not possess good title at contract formation.
Mutual Mistake
Case • Goldsbrough Mort v Quinn
Facts • D granted P an option for purchasing land, each party had a different understand of the construction of the clause.
• P sought specific performance
Key points
• In the absence of fraud, misrepresentation or unconscionable conduct, the contract cannot be set aside on grounds of mistake.
• To void the contract due to the party’s negligence or want of care would unfairly prejudice the other party.
